European stock markets dropped after Donald Trump said he plans to put a 30% tax (tariff) on goods from the European Union. This is the latest step in the trade fight between the US and Europe.
Trump made the announcement on Saturday. In response, the EU has decided to wait before adding its own taxes on US goods, hoping to make a deal with the US before the August 1 deadline.
Negative Impacts on the Crypto Market
Investor Fear and Panic:
Trade wars create fear in financial markets. This can lead to panic selling, including in crypto, causing prices to fall.Liquidity Pressure:
If traditional markets fall, investors may sell crypto assets to cover their losses elsewhere, reducing demand and pushing crypto prices lower.Strong US Dollar Effect:
Tariffs may strengthen the US dollar. A stronger dollar often leads to lower crypto prices, since crypto is priced in dollars.Global Recession Risk:
If the trade war grows, it could slow down the world economy. In tough times, people might avoid risky assets like crypto.Regulatory Scrutiny:
Economic instability may lead governments to tighten regulations on crypto to protect their financial systems.
